You Don't Need A Mythical Club Membership To Call Yahoo's Patent Threat Against Facebook Desperate

from the now-where's-my-membership-card? dept

We just wrote about Yahoo admitting to the world that it was done and cooked as an innovative company when it chose to threaten to sue Facebook over patents. Plenty of other commentators wrote similar stories. We've all seen this pattern before: Company that used to lead the market, but has become an also-ran, suddenly pops up with patents to sue the hot new thing. It's a sad statement of a company that just can't compete any more. However, in a really, really bizarre screed, hedge fund investor Eric Jackson seems to suggest there's a crazy conspiracy of hypocritical bloggers making these statements.

It should be noted that Jackson has a bit of a reputational stake here: four months ago, he specifically called on Yahoo to do exactly what it's doing now. So, now he seems to want to defend this turf, but his argument is bizarre and nonsensical. It starts off with a crazy conspiracy theory about how Silicon Valley bloggers have a special "clubby" relationship with VCs:

If you’re a blogger, you play nice to keep future sources happy (unless you’re someone like Kara Swisher and reached another level of appreciation/admiration). If you’re a VC, what makes your $10 million check more valuable than the next guy’s? Of course, you’re going to be nice. It’s all about access for these non-engineers. If you’ve been black-balled in Palo Alto – whether you’re a VC, blogger, or PR person — what advantage do you have?

Considering that I am a "Silicon Valley blogger" and have been around and doing this longer than anyone he mentions, I find this curious. I know it's become a popular talking point lately -- this supposed close relationship between VCs and bloggers -- but I seem to get by just fine without such relationships (yeah, I know some VCs, but I don't recall ever using one as a source, other than on information they stated publicly -- so not as a "scoop"). As for "what advantage" you have, if you don't have VCs feeding you information, that's a ridiculous question. Plenty of blogs have advantages in the community of readers they have and the analysis and insight they provide. Jackson seems to believe that the way a blogger can provide value is by being first. He's wrong.

He follows this up with an argument that doesn't make any sense at all -- something about the fact that new nominees to Yahoo's board are all from New York... and that means something crazy about the "negative reputational effects" it would have on anyone in Silicon Valley to serve on Yahoo's board. I have no idea what this means. I can't think of any negative reputational effect it could possibly have. He also mentions the "open secret among Silicon Valley elites that Yahoo! is in great need of reform." Wait. That's an "open secret"? How about it's not a secret at all. It's common sense to anyone who has watched Yahoo fade from glory and fail to actually keep up in the marketplace. Suggesting all this stuff about "open secrets," "Silicon Valley elites," and "reputational effects" just makes it sound like there's a conspiracy going on where there's none. Someone has hit the paranoia sauce hard.

What does all of this have to do with patents? I have no freaking idea. And neither does Jackson, who transitions with the grace of a rhinoceros ballerina, by simply switching to the patent question and insisting that this somehow "proves" the nonsense he just spouted.

But the vocal, nonsensical, and hypocritical response this morning to Yahoo! serving Facebook notice that it’s in violation of 10 - 20 key patents by several Silicon Valley watchers takes this clubbiness to new heights.

A bunch of veteran Silicon Valley observers, who know damn well what Yahoo's move is a sign of, isn't evidence of any "clubbiness." It's evidence that a bunch of people who know this space have seen this train wreck before. He then attempts to explain the "two big problems" with people pointing out that Yahoo's actions are a bad sign.

The merits of their assertion that anyone claiming intellectual property rights is somehow a “troll” and “not innovating.” When did we decide that IP is reprehensible? I missed that lesson at blogging school.

Er. It's not "blogging school." It's just Silicon Valley (and history) in general. We believe in innovating in the marketplace, not fighting in the courtrooms for the most part. A study last year suggested that somewhere between 70% and 80% of folks in Silicon Valley are generally distrustful of patents. I learned that by paying attention to reality. Not blogging school.

Should no company be able to “innovate” something without it immediately being copied by dozens of other firms? Is mass copycatting preferable to having rule of law saying someone should be able to come up with a new idea — as recognized by an impartial third party — and then have that idea protected for some period of time (not forever)?

Actually, there have been studies and research that suggest that despite Jackson's mocking rhetoric, indeed, yes, the ability to copycat is preferable to monopolies on ideas. Why? Because merely being a copycat isn't particularly effective. First movers have an advantage, and you win in the marketplace not by copying, but by out-innovating and providing something better. Even better, as others copy you and try to out innovate you, you get to learn from them too. And thus, innovation accelerates. That's a good thing.

If Sarah Lacy et al. find IP so reprehensible, I would ask them: are you arguing for Silicon Valley to be a place much closer to China where Internet firms can engage in mass copycatting immediately as a normal course of business? Is that what you want? Is that what your sources at Facebook, LinkedIn, Digg, and all the other great Web 2.0 companies of the future want?

It's already the normal course of business for the most part. We see copying happen all the time, and history has shown that's where much of Silicon Valley's innovative nature comes from. And I have no idea what the sources at these companies want -- but in general, yes, most of the folks I know in Silicon Valley seem to prefer to compete in the marketplace. I was at a roundtable of entrepreneurs not too long ago, meeting with some federal officials, discussing patents, and the officials seemed to expect that everyone would talk about the importance of more patents. Instead, every single entrepreneur talked about how patents were a distraction and a hindrance to their business. Multiple entrepreneurs talked about how they didn't care if people copied them, because they understood their own customers better and were already ahead in the market. Jackson seems to ignore all of this.

The obvious hypocrisy between these Valley-types criticizing Yahoo! and yet whistling past the Cupertino graveyard with Apple is what’s really galling to me. If all of you are so incensed by a company protecting its IP rights, why are you not picketing in front of Tim Cook‘s house? Hasn’t Apple pursued this line of defense/offense for its business most aggressively of anyone in the Valley?

It goes back to clubbiness. One of the rules of the Valley is that no one criticizes Apple (or Google for that matter).

Geez. I guess all those blog posts above don't exist. And, honestly, that's just crazy talk. I know tons of "Silicon Valley bloggers" who criticize Apple (and "Google for that matter") all the time. Just for the hell of it, since all the links above are about Apple, herearesomecriticizingGoogletoo, for "that matter."

Does Jackson even read the blogs he's slamming?

And for those saying that Yahoo! caved to Wall Street pressure to launch a patent fight now against Facebook prior to its IPO, this avoids looking at some key facts. Starting in 2005, Yahoo! began to make a concerted effort to develop its patent portfolio. According to PatentVest, Yahoo! was granted 20 patents in 2002 by the US PTO, 50 in 2006, 80 in 2008, 300 in 2010, and 325 in 2011. One of the key IP lawyers at Yahoo! in 2006 left the company shortly thereafter to take a more senior job at Google doing the same thing.

All companies in Silicon Valley recognized this trend and began investing in protecting their IP starting in 2006. Yahoo! was one of many doing this. When Yahoo! began growing its portfolio, it was before anyone realized Facebook was going to be the size it is today. Of course, Yahoo! famously tried to buy Facebook for $1 billion in 2006 — which was seen as an outlandish number to pay at the time by the blogosphere.

This is a convenient rewriting of history. While he's right that many companies in Silicon Valley started investing heavily in obtaining patents around that time, it wasn't to use them as an offensive weapon -- but as a defensive weapon against silly lawsuits from dying companies... like what we're seeing with Yahoo today.

Which brings us to today. Yahoo! has a case against Facebook. It might have cases against others in the future. Yahoo!’s owned by its shareholders – not the clubby bloggers of Silicon Valley.

Let the bloggers do what they need to do to protect their self-interests. Yahoo! will do the same.

But that's the thing: this strategy never works. That's what the bloggers were saying. Because we've seen it. The companies that start suing more nimble, more successful competitors over patents, always end up failing in the long run. That's why it's a clear indicator of a company that's done innovating. Breaking out the "sue over patents" folder is a key sign of a company that knows it can't compete. Because when you can beat the competition by innovating, suing over patents is always seen as a waste of time.

Shareholders in Yahoo -- and Jackson admits that he is one -- may get some short term benefits, if it happens to get a chunk of cash from some company, but when a company that fits Yahoo's profile starts suing over patents, it's a clear, clear sign that it's time to short that stock. The company has given up.

Should no company be able to “innovate” something without it immediately being copied by dozens of other firms? Is mass copycatting preferable to having rule of law saying someone should be able to come up with a new idea — as recognized by an impartial third party — and then have that idea protected for some period of time (not forever)?

No one should get the power to exclude others from the market, that power end up always being abused.
More we have real life examples of sucess without monopolistic tendencies in the tech sector. Hello! open source anyone?
So I can't see why we need monopolies to exist at all.

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If Sarah Lacy et al. find IP so reprehensible, I would ask them: are you arguing for Silicon Valley to be a place much closer to China where Internet firms can engage in mass copycatting immediately as a normal course of business? Is that what you want? Is that what your sources at Facebook, LinkedIn, Digg, and all the other great Web 2.0 companies of the future want?

I would argue that it is preferable to have a enviroment closer to China, not the government but the business there since the government can't and won't stop others from copying each others and there are no entrenched big players influencing the government and laws they are growing faster and anyone has a chance to do something either by copying someone else or doing his own thing.

The US has 40 million people bellow the line of poverty, wouldn't be wonderful to have those 40 million people copying others suscessfull business models and starting their own? as a side effect it also serves as a natural limiter so it will be harder to have "too big to fail" entities, but we move into "cell producing" companies, many of them. Their numbers would expand or contract according to market forces so people could jump to other business and enter those markets if they need to, how is that not more desireble?
One company may make less, but the network of companies would probably surpass one monolitic one and be more fexible to market demands, it also opens the door for smaller players to catter to market segments that are of no interest to big companies, how is that not desireble?

Now when you have a government granted monopoly in this case patents, what happens is that those patents coalesce into one big pool and become one huge wall that a few control and exclude everybody else, which is bad, it is even more immoral in the middle of a great rescession.

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All companies in Silicon Valley recognized this trend and began investing in protecting their IP starting in 2006. Yahoo! was one of many doing this. When Yahoo! began growing its portfolio, it was before anyone realized Facebook was going to be the size it is today. Of course, Yahoo! famously tried to buy Facebook for $1 billion in 2006 — which was seen as an outlandish number to pay at the time by the blogosphere.

Everybody noticed that patents would become a problem in the near future because of the exclusionary nature of that monstruosity that is why everybody is trying to stockpile them, not because they are useful, but because they can be used to harm business.
Now if Yahoo bought Facebook in 2006 probably Facebook would have died off by now, can anybody remember something Yahoo touched that didn't turn to poop recently? I can't but I am not trying hard either.

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Let the bloggers do what they need to do to protect their self-interests. Yahoo! will do the same.

Could Yahoo not do that without trying to exclude others but by being more competitive or they just throw the towel and realized they would never recapture the good ol'days and will just be a patent troll for now on?
Even Apple had bad times, it was not so long ago, that Microsoft was the one that helped them not to go bankrupt. Have they no faith in their ability to innovate?

Re: Re:

What I love about open source is the meritocracy part, it is not enough to have an idea you need to learn the trade and become good at cooperating with others, you have to build something, you just can go bullying others around or you will find yourself alone and forgotten.

That cooperation is a better foundation for everything, you can't exclude anyone, you don't have the power to stop others from doing something or proving that they can do better and everybody works in cooperation to achieve something greater than themselves.

It is a win-win situation, unlike granted monopolies that are only a win for the holder of that monopoly.

First of all...

So, i just looked at my portfolio, and apparently i own about 3 dozen shares of yahoo. I think i picked them up because they were cheap, and i figured at some point they would do something interesting enough to make them worth selling again.

So, if Yahoo works for the shareholders, i'd like to register my opinion that this is a dick move and doomed to failure. But hopefully they'll make it look good so i can dump the stock and make a couple hundred bucks.

Re: Re: Re: Considering that I am a "Silicon Valley blogger"

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RMS, though he's loud, arrogant and frequently annoying doesn't control anything but the evolution of the General Public License.

Last time I read the man he still doesn't like the term "open source" as his term is "free software", free as in to copy, add to. modify and release again under the SAME license, in his case the GPL. There are other open source licenses, you know, like that BSD and Apache licenses.

RMS is also rabidly opposed to software patents. So please point me to his monopoly.

Re: Re:

First off it isn't an issue of quantity of money which causes poverty. We have plenty of money in the economy, if anything there is too much.

Secondly, if those people entered the marketplace with products similar to others on the market they would then enter into competition with the incumbent producers. This means that they would pull money away from those incumbent businesses so no more money is needed in this situation it is simply a matter of distribution.

Lastly, while demand in the current economy is low for many goods and services this does not mean there is no room in the marketplace for new actors. This simply means that at worst new competition could potentially force out current market actors as newer competition out sells them.

Re: Re: Re:

Given all the core software that is employed in the Internet today is licensed under the GPL, LGPL, Apache or BSD licenses that sounds pretty open source to me.

Not to bother mentioning that from the start the code was shared, freely built on and innovated on even before any of those open sources licenses existed. Ok, so the Internet was largely developed before the TERM "open source" came about it was built in the same spirit and meritocracy that identifies open source.

Re:

No invite needed. Mike is here.

Now, would you like to something to the discourse? Or do you just want to rant?

Patents, in their current form are more harmful than helpful. In the beginning, the US disregarded foreign patents, and became a powerhouse. Now, we have many many more patents and a whole lot of litigation, and the US is becoming...well less. Do you not see the correlation? Are patents the causation? Not in isolation, but think about it, what are the other major contributors to the current decline in the US economy?

Let's ask a different question. Who would really get hurt if we eliminated patents altogether? A few corporations with big patent holdings? Or the world economy, including the US? Would those few corporations really get hurt?

Re: Re:

CNC Mentor Open source CNC Information Community.DIY Drones supporter of Open Hardware.Caanoo Open source handheld game console.RONJA RONJA (Reasonable Optical Near Joint Access) is a Free Space Optics device originating in the Czech Republic. It transmits data wirelessly using beams of light. Ronja can be used to create a 10 Mbit/s full duplex Ethernet point-to-point link.3D Slicer Open source medical image analyses program

Just To Make Things Clear

OK, some of us are not listening too well.

If Sarah Lacy et al. find IP so reprehensible, I would ask them: are you arguing for Silicon Valley to be a place much closer to China where Internet firms can engage in mass copycatting immediately as a normal course of business?

Yes.

Is that what you want?

Yes.

Is that what your sources at Facebook, LinkedIn, Digg, and all the other great Web 2.0 companies of the future want?

Re:

Of course, since everything internet-related was inherently "open source" and "free software" in the 1970ies, the invention of the term "Open Source" was only made necessary later, after some jerks in the 1980ies started some propaganda that all software needed to be bought and came without source.

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care to give any examples ?

My personal laptop is a pretty good example. It has a complete open source Debian OS with applications for most every single task I could ever think of. The few propriety Windows apps I need for my profession run just fine on Wine.

Currently it is dual boot with 1/3 of the hard drive for Windows, but it will be completely Linux soon because I need the disk space and I haven't had to log into Windows on it for over 9 months now.

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No, patents, copyright and trademarks themselves are not the issue. The problem is lawyers. We need to make a law against lawyers operating as they currently do. Lawyers can become real estate lawyers but to get into the courts should require appointment and a set annual salary not dependent upon winnings. That should effectively drop the amount of crap cases going on.

Also countries should not be allowed to prosecute on any level against a citizen of another country without permission from the country of citizenship, similar to a extradition.